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Wal-Mart's Manhattan Project

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New York Study Says Retailer Will Kill 14,000 Jobs

By Al Norman

Unlike the top secret Manhattan Project in the 1940s, which produced the first atomic bomb, Wal-Mart has made no attempt to hide its ambition to carpet bomb all five boroughs of New York City with its stores. But a new study this week says that for the giant retailer to match the market share it has across America, Wal-Mart would have to open 159 stores in New York City -- and nearly 14,000 jobs would be lost at other merchants. This would be the retail equivalent of an atomic bomb dropped on the retail economy in Gotham.

The report released by the Alliance for a Greater New York (ALIGN) and the Murphy Institute at the City University of New York, titled The Walmartization of New York City, projects that to achieve a 21% share of the grocery market in New York City, Wal-Mart would have to open 159 stores -- which would result in the net loss of nearly 14,000 retail jobs and result in a loss of over $353 million in total wages a year for all remaining retail workers in the city.

Municipal officials rarely comprehend the difference between gross jobs and net jobs. They see a new store going up, and are convinced it means new jobs. But because much of what Wal-Mart sells is already being sold at existing merchants scattered across the city, the net jobs figure is really the bottom line. The ALIGN study estimates that 159 Wal-Mart stores would "create" 9,950 gross jobs -- but at the same time "this would result in the loss of 13,930 jobs in the neighborhoods surrounding the Wal-Mart stores," resulting in a net loss of 3,980 jobs.

But there are other costs as well. If the experience of other states is any guide, as many as 4,200 Wal-Mart workers in Manhattan will end up relying on state and federal tax payers for health care benefits from Medicaid, according to the new report. That figure ought to give New York Mayor Michael Bloomberg pause. Yet three months ago, Hizzoner referred to Wal-Mart as "one of the greatest corporate citizens in the country."

What we do know is that Citizen Wal-Mart is one of the greatest political spenders in the country. According to the Walmartization study, in the first half of 2011, Wal-Mart spent $2.1 million on lobbying expenses in New York -- which is over six times as much as they spent in the past four years combined. Like other Wal-Mart urban forays into Chicago, Boston, and Washington, DC, these campaigns resemble "a full political campaign" the analysis says, with TV and radio spots, newspaper display ads, billboards, polls, and petitions. Wal-Mart has to sell itself before it can sell its Chinese products.

Since the mid 1990s, Wal-Mart has been methodically replacing its 'old" discount stores in suburban and rural markets (many built as recently as the mid-1990s) with larger supercenters. But this big box format approach will simply not fit into urban areas because it's hard to assemble 30+ acres of land in densely populated cities. The Walmartization report suggests that almost three out of four (72%) of these projected Wal-Mart stores will be the Express store format that Wal-Mart launched this year, with footprints of only 15,000 square feet each.

The ALIGN/CUNY study estimates Wal-Mart could add 4 million square feet of retail stores in New York City. But 114 of these units would be smaller stores, or a total of 1.7 million square feet -- 43% of Wal-Mart's projected selling space. The 35,000 square foot Wal-Mart Markets would make up 30% of the total square footage. The larger superstore format would be used in only 11 locations, for a total of 1.1 million square feet, or only 27% of the total selling space.

The economic fallout from Wal-Mart's Manhattan Project should come as no revelation to anyone who has been watching the retail skies. A report released in January of 2011 by the Hunter College Center for Community Planning & Development, and the New York City Public Advocate, concluded that "the opening of a Wal-Mart in New York City would likely eliminate more jobs than it creates, result in the loss of independently owned small businesses, and create an increased burden on taxpayers." That study referred to Wal-Mart as an "economic Trojan Horse."

In an email to supporters this week, ALIGN said "the reality behind Wal-Mart's new hype is excruciating pain for our local economy: shuttered local businesses, depressed wages, and an army of workers dependent on strapped public coffers for basic necessities like food and health care."

Study authors Josh Kellermann and Stephanie Luce conclude that "Wal-Mart destroys more jobs than it creates, drives out locally-owned competitors, and undermines wages for the rest of the industry."

Yet there is still hope for New Yorkers. "We need not be forced to choose between Wal-Mart jobs and no jobs," the study says. "The jobs will be created by other retailers, as long as New Yorkers demand an alternative to Wal-Mart."

If the political mantra this fall is: "It's about jobs, stupid," then Wal-Mart's Manhattan Project is a total bomb.

Al Norman is the founder of Sprawl-Busters. His new book, "Dancing on Wal-Mart's Grave," is due out later this fall. His website is http://www.sprawl-busters.com